When a parent passes away without leaving a will (dying "intestate"), their surviving family members often face not only emotional grief but also the daunting task of sorting out the deceased’s estate. In the Philippines, the process of transferring ownership of a deceased parent’s assets—specifically freezing and claiming bank accounts—is governed by a strict legal framework.
Here is a comprehensive guide on how to navigate estate settlement and bank account claims under Philippine law when a parent dies intestate.
1. The Immediate Legal Reality: Freezing of Bank Accounts
The moment a account holder passes away, their bank accounts are legally considered part of their estate.
- The Notification Process: Once a bank is officially notified of the account holder's death (usually via the submission of a Death Certificate), the bank is legally required to freeze the account. No further withdrawals, checks, or online transfers can be authorized under the deceased's name.
- The Co-owner Exception (Joint Accounts): If the account is a joint account, its treatment depends on how it was opened:
- "And" Accounts (e.g., Juan AND Maria): These require the signature of all parties. Upon the death of one, the account is automatically frozen.
- "Or" Accounts (e.g., Juan OR Maria): Generally, the surviving co-owner can still withdraw funds, but under current tax laws, the deceased's proportional share in the account is still subject to estate tax.
2. Settling the Estate: Two Main Legal Paths
Before any bank releases the funds of a deceased parent to the heirs, the estate itself must be settled. Since there is no will, Philippine law provides two primary methods to do this:
Path A: Extrajudicial Settlement of Estate (EJS)
This is the fastest, cheapest, and most common route. It is used when the heirs are all in agreement and there are no outstanding debts left by the parent.
Requirements for EJS:
- The deceased left no will.
- The deceased left no debts (or all debts have been fully paid).
- All heirs are of legal age (or minors are properly represented by judicial guardians).
- The heirs execute a public instrument called a Deed of Extrajudicial Settlement of Estate, which details how the properties (including bank deposits) will be divided.
- The Deed must be published in a newspaper of general circulation once a week for three consecutive weeks.
Path B: Judicial Settlement of Estate
If the heirs cannot agree on how to divide the money, or if the deceased left significant debts, the heirs must go to court.
- The court will appoint an administrator to manage the estate, pay off creditors, and eventually distribute the remaining bank funds to the legal heirs according to the rules of intestate succession. This process can take years and is significantly more expensive.
3. Understanding Intestate Succession: Who Gets What?
Under the Civil Code of the Philippines, when a person dies without a will, the law designates their compulsory heirs. The money in the bank accounts cannot be given to just any relative; it must follow the legal order of intestate succession:
| Surviving Heirs | Legitimate Children | Surviving Spouse |
|---|---|---|
| Spouse + Children | Divide the estate equally. | Gets a share equal to the share of one legitimate child. |
| Spouse Only | N/A | Gets 100% of the estate. |
| Children Only | Divide 100% of the estate equally. | N/A |
Note: Illegitimate children are also compulsory heirs, but under the Civil Code, an illegitimate child is generally entitled to half (1/2) of the share of a legitimate child.
4. The Crucial Step: Settling the Estate Tax
A bank will not release the funds to the heirs unless proof of payment (or exemption) of the Estate Tax is presented.
- Tax Rate: Under the TRAIN Law (Republic Act No. 10963), the estate tax is a flat rate of 6% based on the net value of the estate.
- The PhP 6,000,000 Standard Deduction: The law allows a standard deduction of up to PhP 5,000,000, plus an additional deduction for the family home (up to PhP 10,000,000). If the total value of the parent's estate (including the bank accounts) is below PhP 5,000,000, no estate tax may be due, but an estate tax return must still be filed with the Bureau of Internal Revenue (BIR) to get the necessary clearance.
- The Certificate Authorizing Registration (CAR): Once the BIR processes the estate tax return, they will issue a CAR or a tax clearance specifically mentioning the bank accounts. This is the "golden ticket" the bank requires.
5. Step-by-Step Guide to Claiming the Bank Funds
Once the family has settled the estate and handled the taxes, they can approach the bank. Here is the typical step-by-step procedure:
Step 1: Gather the Required Documents
Banks are highly bureaucratic regarding deceased accounts to protect themselves from lawsuits. You will need to compile the following:
- Certified True Copy of the parent’s Death Certificate (issued by the Philippine Statistics Authority or PSA).
- PSA-issued Birth Certificates of the children (to prove relationship).
- PSA-issued Marriage Contract of the parents (to prove the spouse's right).
- Valid Government-issued IDs of all heirs.
- The notarized Deed of Extrajudicial Settlement of Estate.
- Affidavit of Publication from the newspaper publisher (proving the EJS was published for 3 weeks).
- BIR Certificate Authorizing Registration (CAR) or BIR tax clearance.
Step 2: Submit to the Bank's Legal Department
Present these documents to the branch manager where the account is maintained. The branch will forward these to their head office's legal department for verification. This review process usually takes a few weeks.
Step 3: Release of Funds
Once authorized by the legal department, the bank will release the funds. They will typically issue a manager's check split according to the shares agreed upon in the Deed of Extrajudicial Settlement, or close the account and transfer the balance to a new account opened by the heirs.
Summary Checklist for Heirs
- Secure multiple PSA copies of the Death Certificate.
- Request the bank to check the exact balance of the account (you may need a formal request letter for this).
- Consult with a notary or lawyer to draft the Deed of Extrajudicial Settlement.
- Publish the Deed in a newspaper of general circulation.
- File the estate tax return with the BIR RDO (Revenue District Office) that has jurisdiction over the parent's last residence.
- Obtain the BIR CAR.
- Present all documents to the bank to withdraw the funds.